Sleepease, a retailer of bedding supplies, orders king-size and queen-size mattresses from a regional supplier. There is a fairly constant demand for each of these products. The annual demand for...

Sleepease, a retailer of bedding supplies, orders king-size and queen-size mattresses from a regional supplier. There is a fairly constant demand for each of these products. The annual demand for queens is 2200; the demand for kings is 250. The unit purchasing costs for queen-size and king-size mattresses are $100 and $120, and the company’s cost to store either of these for one year is $15. Sleepease’s ordering cost is based primarily on the fixed cost of delivering a batch of mattresses. This ordering cost is $500 if either queens or kings are ordered separately, but the ordering cost is only $650 if both are ordered together. Sleepease’s cost of capital is 10%. The company wants to know whether synchronizing orders is better than not synchronizing them, and if so, it wants to find the best synchronized ordering policy.

Objective To find the optimal synchronized ordering policy, and to compare it to the EOQ policy where orders for the two are not synchronized.